Customer relationship management (CRM) software is a significant and oftentimes necessary tool for your business. It enables you to keep track of customer information, promote lead generation, and generate reports and data that can help make your business more efficient and productive.

There are a multitude of CRM software programs available for you to choose from. These programs can generally be divided into two categories: those systems installed and maintained on premise, and those that are outsourced to internet cloud hosting services. Each system has its own benefits as well as disadvantages, and you should compare how well each would fulfill your company’s needs before making a purchase.

Security :

The security and confidentiality of your business information and that of your customers is paramount. Security breaches can result in fraud, identity theft, and a sharp decline in customer trust.

- The greatest benefit cloud-based CRM has to offer is also its greatest weakness: it is hosted on and accessible through the internet. The convenience of accessing your CRM anywhere there is an internet or mobile connection is offset by the risks posed by online hackers.

- Hackers are becoming increasingly skilled at bypassing security and encryptions systems. If the ease of access outweighs the risk to security in your opinion, be sure to utilize a cloud-based system that has the most up-to-date and advanced security available.

- CRM software that is based on-premise does not require an internet connection in order to function and all its information is kept offline. There are no risks to the security of your information because without online access, it’s impossible for a hacker to break in.

Reliability :

Your CRM system needs to be not only accessible, but also reliable, if it’s going to serve your company’s best interests. You need to be able to pull up customer information when they call in order to best serve their needs, and you need to be able to input important information as it occurs so it doesn’t get lost.

- Cloud-based CRM is available anywhere there’s an internet connection, and many programs also come with access for mobile devices and phones.

- The cloud’s dependency on a reliable connection exposes a significant weakness in the software. Should your internet go out, due to equipment failure, outages, or distance from a wireless hotspot, you can’t access any of your information.

- On-premise software doesn’t rely on the internet, so it can function in a variety of circumstances where its cloud-based counterpart would fail. The software can be loaded onto multiple computers and laptops owned by your business, so that you can take it in a tunnel or to the mountains and always have your information at hand.

Customization :

Oftentimes you want your CRM software to perform specific functions, such as automating reports or integrating with another program used by your company. The degree to which your business requires customizable software impacts your decision between on-premise and cloud-based CRM systems.

- Cloud-based CRM is often a one-size-fits all build with limited options for customization. If you plan to stay within the default parameters of the program, this shouldn’t be a problem.

- On-premise CRM is fully customizable. You control the system, so you can add whatever features or functions you need in order to capitalize on its use. You can integrate it with your other systems easily, especially if you have a dedicated staff member on hand to manage all the program’s modifications and maintenance.

Cost :

The cost structures for cloud and on-premise software also differ. Cloud-based systems are hosted on a remote server, the use of which you are charged for on a monthly basis. On-premise software is purchased in one large up-front payment, but once purchased comes with no additional costs.

- Cloud fees can change from month to month due to bandwidth uses and any features you may add. This can make it difficult to budget for the cost of the program as it is constantly changes.

- In order to offset the inconvenience of purchasing on-premise CRM software all at once, you can get a payment plan to spread out the cost over the course of the year. The monthly cost doesn’t change no matter how you use the software.

Cloud-based CRM software can seem like an easy and convenient choice for your customer management needs. However, you should carefully examine how it functions compared to on-premise programs. The ease and convenience of the cloud also comes with some risks, so be sure to know how you plan to use your CRM software before committing to a specific system.

Megan Webb-Morgan is a web content writer for Resource Nation. She writes about small business, focusing on topics such as call center software and small business loans.